The sale of cryptocurrency custodian GK8 will net $25 million for bankrupt cryptocurrency lender Celsius and its Series B investors.
In a late-Monday filing, it was said that $24 million of the Settlement would be used to cover legal costs and that the remaining $1 million would be distributed among the holders of Series B.
Galaxy Digital purchased the self-custody platform GK8 from Celsius during its bankruptcy proceedings. Sources had previously claimed that the price was significantly less than the $115 million Celsius had paid for it, although the terms of the deal were kept private.
Disputes Over Settlements
Despite a major dispute over the recommended money-distribution plan, a settlement was eventually struck. In order keep the bankruptcy process moving forward, the majority of Series B shareholders are pleading with the Court to accept the deal.
According to the filing, the Settlement Agreement resulted from a shared desire to avoid costly litigation, a contentious and protracted confirmation process, and a corresponding increase in professional costs.
The agreement reached between the Debtors, the Committee, and the Initial Consenting Series B Preferred Holders, which accord was painstakingly negotiated and is eminently reasonable, also includes the proposed allocation as a substantial component.
The defaulted cryptocurrency lender finished its Series B funding in November 2021. The growth equity firm Westcap and one of Quebec’s pension funds led the oversubscribed round, which raised $400 million to $750 million.
The filing closed by stating that the Settlement unlocks significant value for the Debtors’ creditors and gives the Debtors and all parties valuable future confidence.
It declared that the Motion should be granted and that the Court should dismiss the objections. Last Monday, the SEC filed a lawsuit against Celsius and its former CEO Alex Mashinsky, charging that the two men raised billions through the fraudulent and illegal sale of “crypto-asset securities,” deceived investors about the company’s financial status, and artificially inflated the price of the native Celsius coin.
